Opinion columnist and blogger at The Atlanta Journal-Constitution.

Struggling Ga. taxpayers subsidize jetsetters’ lifestyle

Gulfstream, the Savannah-based manufacturer of high-end business jets, just announced the launch of two new lines of corporate luxury jets: The G500, with a selling price of $43 million, and the G600, with a selling price of $54 million.

Within Gulfstream’s product line, however, the two new planes are the rough equivalent of the cars that you find available at Avis or Hertz. As they roll off the assembly line, many of them will be snatched up by firms that lease private jets or sell time-shares to corporations or wealthy individuals, the Wall Street Journal reports.

The real top-of-the-line model at Gulfstream is the highly coveted G650, with a sales price of $64.5 million and a waiting list of almost four years for delivery. It has a maximum range of more than 8,000 miles, reaching air speeds twice that of commercial airliners, and boasts luxury touches that make it a must-have status item among billionaires.

And when you’ve got billionaires lining up, willing to wait years to get their hands on your product, business is very good. Stock of Gulfstream’s parent company, General Dynamics, is up 33.7 percent in the past year, even after the recent selloff on Wall Street, and second-quarter profits were $646 million, with Gulfstream generating a huge part of that number.

In many ways, that’s a great success story. However, I think it’s worth noting that the people of Georgia are making their own contribution to the General Dynamics bottom line, in addition to what they contribute in terms of their own labor and education. Earlier this year, the Georgia Legislature approved a bill that gives Gulfstream a permanent special-interest tax break worth an estimated $29 million to $40 million a year.

Under House Bill 933, signed into law by Gov. Nathan Deal in April**, Gulfstream gets a permanent sales tax exemption on all parts used to maintain and repair the high-end corporate jets that it sells. Your local auto mechanic pays a sales tax on items used to repair your car; which means that he in turn charges it to you. But Gulfstream and its deep-pocketed customers are exempt.

It’s a remarkable situation. Corporate after-tax profits are at or near record highs, which is why Gulfstream’s business is so good. The wealthiest 1 percent have collected almost all of the income gain generated since the Great Recession. CEO compensation last year was up 21.7 percent since 2010. It is up 937 percent since 1978.

Meanwhile, median household incomes in Georgia continue to drop. More than 17 percent of Georgians live in poverty, as do 27 percent of our children — that’s more than one in four. In fiscal 2013, we had 42,000 more students in Georgia public schools than we did in 2009, being taught by 9,000 fewer teachers. We aren’t allowing our working poor to get access to Medicaid coverage that is available in other states because we’re told that Georgia can’t afford it.

Yet even with all that, Georgia’s struggling taxpayers are being forced to subsidize a extremely profitable manufacturer of high-end corporate jets and its billionaire customers to the tune of up to $40 million a year.

In what kind of world does this kind of income redistribution make sense? In what kind of world can that be said to be fair?

The kind of world in which we live, apparently.

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** A year earlier, in 2013, Deal had signed a temporary extension of the Gulfstream sales-tax exemption on the same day that he vetoed a less expensive sales tax exemption for medical clinics, health centers, food banks and other charities.

Reader Comments 0

The corporate welfare queens are living high off the hog, pulling in profits that would make a herd of elephants choke and yet they need taxpayer monies. What's wrong with that picture???? Republicans like Deal, looking out for their corporate sugar daddies, is not looking out for the taxpayers, the ones who are paying the bills.

Just be honest and say you want lower taxes and your concern isn't really where the burden is shifted or not. I could at least respect the honesty.

All the hocus pocus about sales tax this or that is just a veil but it is very transparent. You are smarter than that or at least I think you are smarter than that.

If your income and capital gains taxes were lowered today chances are that the talk of tax reform, sales tax blah blah would die down in quick fashion.

The ruse is to get lower taxes. It is just how you are going to package and market it is the real issue. Your choice to have that opinion and work for whatever system you like but try a little honesty for a change.

The General Assembly gave final passage Thursday to
legislation extending indefinitely a sales tax exemption on aircraft repairs or
maintenance performed at Gulfstream Aerospace Corp.’s service center in
Brunswick.

When
the legislation first came before the House early this month, Majority LeaderLarry O’Neal,
R-Bonaire, pulled out numbers showing the additional jobs the sales tax
exemption would help Gulfstream create would generate about $13 million per
year more in income taxes than it would cost the state in sales taxes.

The Gulfstream bill does have
one caveat. To ensure the business the Brunswick center generates is from out
of state, the tax exemption would be limited to repairs or maintenance of
aircraft that are not registered in Georgia.

Give up $40Millions (top end of estimate) in sales taxes to generate $53Millions ($40Millions + $13Millions in additional income taxes) in income taxes (not to mention the jobs). Sounds like a pretty good deal to me.

@Yes_Jesus_Can If they don't have to pay the $15K per year health insurance cost for everyone AND all health insurance claims go through medicare instead of our current fractured system... YES. The numbers support it.

@gotalife that's peanuts. Let's do one better: universal health care for all paid for by a payroll tax. How much would that save businesses each year in costs transferred to the government like it is in other countries?

You're just shifting money around, and you're not proposing any responsibility on the consumer, which is what is required--knowledge is required for healthcare reform. Bamster is bending the expense curve UP, not down as he promised.

Americans who own private jets need to pay more in taxes, President Obama argues. So it seems odd that foreign executives riding Gulfstream jets from Shanghai to Mumbai get U.S. subsidies from Obama's favorite export agency.

The Export-Import Bank of the United States recently announced a milestone: Under Obama, the agency has subsidized the sale of $1 billion in private jet sales to overseas customers.